New Control Mechanism For Foreign Direct Investment In Belgium

JurisdictionEuropean Union
Law FirmCMS Law-Now
Subject MatterGovernment, Public Sector, Inward/ Foreign Investment, Terrorism, Homeland Security & Defence
AuthorAnnabelle Lepiece
Published date10 March 2023

On 1 June 2022, a draft cooperation agreement was concluded between the Federal State and the various Belgian Regions and Communities in order to set up a screening mechanism for foreign direct investments.

From its entry into force, scheduled for 1 January 2023, non-European investors will have to notify an Interfederal Screening Committee of their investment projects in a Belgian company active in a highly sensitive sector or one likely to affect security, public order or the strategic interests of the Regions and Communities.

Three years after the adoption of Regulation (EU) 2019/452 of 19 March 2019establishing a framework for screening foreign direct investments in the European Union, on 1 June 2022 the various competent governments concluded a draft cooperation agreement which aims to introduce a foreign direct investment ("FDI") screening mechanism in Belgium as of 1 January 2023.

The objective is to introduce a mechanism for mandatoryex-antenotification to an Interfederal Screening Committee ("ISC") for investment projects envisaged by non-European investors in a Belgian company operating either in a highly sensitive sector or in a sector likely to affect security or public order.

Currently, in Belgium, only the Flemish Region has limitedex-postcontrol of foreign investments in Flanders' strategic (semi-) public assets by virtue of the Decree of 7 December 2018.

The future control mechanism will have an impact on the acquisition process of foreign investors in Belgium. Like the obligation to notify the Belgian Competition Authority or the European Commission in advance of merger projects, this formality cannot be ignored, given the power conferred on the ISC and the sanctions that may be imposed in the event of non-compliance with the notification procedure.

It should be noted that the draft cooperation agreement, currently submitted to the legislation section of the Council of State, will be presented for ratification to the various parliaments before the end of this year and should enter into force on 1 January 2023.

Creation of the Interfederal Screening Committee

Due to the overlap between federal competences (maintenance of public order and national security) and the competences of the federated entities (e.g. the regional competence of investment promotion), a cooperation agreement has been reached by the federal government and the governments of all federated entities in order to organise the FDI screening process.

Furthermore, in order to avoid a fragmentation of control that could deter investors, the draft cooperation agreement provides...

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